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Information Regarding Appealing an IRS Federal Tax Lien
When, Why, What & How
The IRS must issue you a “Notice of Federal Tax Lien (“NFTL”) and Your Right to a Collection Due Process (“CDP”) hearing under IRC 6320, or IRS Letter 3172, within five days of filing a lien for any tax and period. This notice is to inform you that a lien has been filed, and you have the right to request a “Collection Due Process” hearing within thirty days from the time frame specified in the notice.
There are two types of IRS appeal options available depending on the circumstances and timeframes surrounding the lien:
Collection Due Process (“CDP”) or Equivalent Hearing (“EH”). This must be requested within thirty days of the NFTL’s date listed. Use IRS form 12153 Collection for a Collection Due Process or Equivalent Hearing, or you could use a written request with the same information and send it to the address shown on your lien notice. The IRS must notify you within five days of filing an NFTL each time the IRS files one. This notice may be mailed, given to you, or left at your home or office. After those five days, you have thirty days to request a hearing with Appeals. The lien notice you receive will indicate the date this 30-day period expires. A CDP hearing will allow you to contest the IRS’s CDP determination in US Tax Court. It may be prudent to speak with a tax attorney-CPA for assistance.
What Happens If I Miss Thirty-Day Period to Request a CDP Hearing?
If you fail to request a CDP hearing by the 30-day time frame, you can request an EH using form 12153 (check the EH box on line 7) or by writing a letter. An EH must be requested on or before the end of a one-year time period plus five business days after the Notice of Federal Tax Lien filing date.
When Should You Consider Appealing an IRS Tax Lien?
The IRS may release a tax lien under several circumstances that may warrant appeal consideration if applicable to your situation:
- The IRS did not allow you to dispute the amount owed.
- The debt was paid in full before IRS filed the lien.
- There has been either a withdrawal, discharge, or subordination of the IRS tax lien (more on this later).
- Bankruptcy filing results in an automatic stay of tax collection activity.
- The Collection Statute Expiration Date had expired before IRS filed the tax lien.
- The IRS performed an improper tax lien filing procedure, such as failing to send you proper notice before filing the lien.
- The IRS incorrectly filed a lien in your name.
- You would like to apply for an available tax debt resolution, such as an Installment Agreement or an Offer In Compromise.
- The tax liability exclusively belongs to your spouse, and you plan to apply for Joint Spouse Liability Relief.
What Happens if I Win a Collection Due Process Appeal?
Upon a successful appeal, the IRS can take the following actions toward your lien:
- Keep the tax lien in place.
- Withdrawal of the tax lien entirely by removing the Notice of Federal Tax Lien from public records.
- Discharge the tax lien from specific property, allowing you to negotiate the property without having an IRS lien attached.
- Subordinate the tax lien, enabling assigned creditors’ liens on the property to have precedence over the IRS’s liens.
These options can be requested on Form 12153; you need to specify if you want a lien subordination, discharge, or withdrawal and explain why the IRS should honor the request.
In addition, on form 12153, you can also request other alternative actions you may be eligible for to remove the tax lien, such as setting up an installment agreement or applying for an Offer in Compromise. You have to meet specific requirements for these. You may also list other reasons why the lien should be released; for example, it was not you but your spouse responsible for the tax liability.
This can be incorporated into a letter if you choose not to use the form. It may be possible to circumvent the appeals process simply by dealing directly with the collection office that sent you the notice. Call the representative’s number listed on the notification to explain your position. If you are successful, you can cancel your request for a hearing. For proper due diligence purposes, you should submit a written request for an appeal hearing. For each NFTL filed, you are entitled to a separate hearing.
What Happens After You Request a CDP or Equivalent Hearing With the Office of Appeals?
The IRS Office of Appeals office will contact you to schedule a meeting once they receive your request. If granted, the initial appeals conference could take place over several mediums, face to face, over the phone, or by correspondence. There could be additional meetings and correspondence with the IRS Office of Appeals.
Upon completing their investigation, the IRS Office of Appeals will issue a determination letter indicating their decision to grant or deny your request.
If your request is denied, you can seek a judicial review from the US Tax Court. You must petition the US Tax Court within thirty days of the date the Office of Appeals issues the determination letter; otherwise, you lose the right to go to tax court.
How and When to Request a Collection Appeals Program
Collection Appeals Program (“CAP’). You may appeal the proposed filing of a Notice of Federal Tax Lien (NFTL) or the actual filing of an NFTL at the first and each subsequent filing of the NFTL. You may also appeal denied requests to withdraw an NFTL and denied discharges, subordinations, and non-attachments of a lien. A proponent for utilizing a CAP hearing is that it generally occurs much quicker than other appeal methods; however, the results are not challengable in a court. In addition, this is not a forum to challenge the amount of the taxes owed.
How Do I Appeal an IRS Tax Lien When No Revenue Officer is Present?
If you have not been assigned a Revenue Officer to your case, you can make a call to the number on the notice and explain your position on why you disagree with the tax lien. It’s helpful and vital to have a solution to present to the IRS representative. If you are unable to come to terms with the representative, you can request an appeal to that individual’s manager. The manager should get back to you on a call within twenty-four hours. If you cannot resolve this with the manager, the manager will submit your case to appeals. This is all done without a written request.
How Do I Appeal an IRS Tax Lien When Dealing With an IRS Revenue Officer?
If you have an IRS Revenue Officer (“RO”) assigned to your case and experience a disagreement with how to proceed, you may seek a conference with the IRS Collection Manager. If you disagree with the Collection Manager’s determination, you have three business days from the conference date to make a CAP appeal by submitting Form 9423, Collection Appeal Request. In addition, within two days of having the manager conference meeting, you will need to inform the RO of the request.
If the Collection Manager does not reach out to you within two days of your original request, you can make another attempt or submit Form 9423, Collection Appeal Request. If you choose to submit the form, you will need to indicate when you made the manager conference request and that they were unresponsive.
For more information regarding IRS Federal Tax Liens, please see the following recent blog articles:
Who Can Represent Me in an Appeal for a Federal Tax Lien?
When appealing a tax lien through a CDP Hearing or Equivalent Hearing,
the following people can represent you:
- You, the taxpayer.
- If taxes are business related: Corporate Officers, General Partners, and some full-time employees.
- Licensed tax attorneys, CPAs, and IRS Enrolled Agents.
A seasoned, experienced multi-licensed tax professional addressing your tax lien will significantly increase your chances of success.
Get Help Appealing an IRS Federal Tax Lien with Trusted Representation at your Side!
Federal Tax Lien dealings can be very complex and require professional help. Harmon Tax Resolution, LLC can assist you throughout the process. At Harmon Tax Resolution, LLC, an experienced multi-licensed tax attorney-CPA-IRS EA will ensure that your tax lien situation gets the necessary representation. For a Free Consultation, Call Today @ 772-418-0949 or complete the online inquiry form so that you can sleep well tonight.
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